Approved classification list protection defeats differential duty demand despite adverse tariff classification of fan regulators.

Fan regulators cleared separately were classified under sub-heading 8414.99 as parts and accessories, rather than under sub-heading 8414.20, because the classification turned on the HSN structure for accessories not elsewhere specified. Differential duty was nevertheless held unsustainable where the clearances had been made on the basis of an approved classification list, since the approved basis of assessment could not be displaced to raise a short-levy demand in that manner. The classification issue was decided against the assessee, but the recovery claim failed because the approved classification list barred the proposed duty demand.

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Issues: (i) Whether fan regulators manufactured and cleared by the assessee were classifiable under sub-heading 8414.20 or sub-heading 8414.99. (ii) Whether differential duty could be demanded when clearances were made on the basis of an approved classification list.

Issue (i): Whether fan regulators manufactured and cleared by the assessee were classifiable under sub-heading 8414.20 or sub-heading 8414.99.

Analysis: The classification question was examined with reference to the HSN Explanatory Notes and the structure of heading 8414. The reasoning accepted that accessories presented with the machine or apparatus with which they normally belong may be classified with that machine, but noted that the issue here concerned fan regulators cleared separately. Since heading 8414 contains a separate sub-heading for parts and accessories, and sub-heading 8414.99 covers parts and accessories not elsewhere specified, the proper classification of fan regulators cleared as such was treated as falling under the accessories entry.

Conclusion: Fan regulators were held classifiable under sub-heading 8414.99, against the assessee.

Issue (ii): Whether differential duty could be demanded when clearances were made on the basis of an approved classification list.

Analysis: The demand issue was decided on the footing that the classification list had been approved by the department during the relevant period. In light of the principle applied from Cotspun, once clearances were made on the basis of an approved classification list, a demand for differential duty could not be sustained as a short levy in the manner alleged.

Conclusion: Differential duty demand was held not sustainable, in favour of the assessee.

Final Conclusion: The classification was determined against the assessee, but the duty demand failed because the approved classification list barred the proposed recovery.

Ratio Decidendi: Where goods are cleared under an approved classification list, a later differential duty demand is unsustainable if the department seeks to overturn the approved basis of assessment.

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